2025 Catastrophe Review: Wildfires and severe convective storms dominate global losses

Author: James Cosgrove, Associate Director - Manager, Insurance Solutions, Moody's RMS Event Response 

Global catastrophes in 2025 caused approximately US$224 billion in economic losses, and according to market estimates from Munich Re and Swiss Re, insured losses were around US$108 billion and US$107 billion, respectively.

This is the sixth consecutive year that insured losses have surpassed US$100 billion, although the total for 2025 is approximately 25% lower than the record insured losses of 2024.

So-called ‘secondary’ perils—including wildfires and severe convective storms —dominated the insured loss landscape in 2025, underscoring the view that these non-peak ‘secondary’ perils should not be classed as secondary at all, as losses continue to mount.

The U.S dominated global insured losses, accounting for more than 80% of the total, driven primarily by the Los Angeles wildfires and severe convective storm outbreaks throughout the first half of the year.

Moody's RMS Event Response™ has recently published its comprehensive 2025 Catastrophe Review, which provides a more detailed analysis of the main catastrophe events in 2025 and is available exclusively to customers via Moody’s Support Center.

We have also just published our 2025 Catastrophe Review: Executive Summary, which is now available for everyone to download. For this blog, I will provide a topline overview based on the summary.

Wildfire: Southern California’s costliest wildfires 

The Los Angeles wildfires were the year’s costliest event. At the start of 2025, from January 7 to January 31, multiple destructive wildfires spread across the greater Los Angeles metropolitan area.

The two largest wildfires, the Palisades and Eaton Fires, were the second- and third-most damaging wildfires in California’s history, respectively, with 30 fatalities and over 18,000 structures destroyed. By the time the two fires were fully contained, they had burned more than 37,000 acres (15,000 hectares).

The wildfires benefited from a trifecta of favorable conditions. Consecutive wet winters had fueled vegetation growth, followed by a severe drought, and an intense Santa Ana wind event that fanned the flames into urban conflagrations. The wildfires underscored the growing interplay of natural factors, urban development, and human activity in shaping wildfire risk as well as the urgent need for adaptive risk management strategies.

Post-event reconnaissance conducted by Moody’s RMS Event Response teams revealed powerful insights into fire dynamics and resilience measures.

Our observations highlighted how a range of urban features, such as cemeteries with irrigated grounds, defensible ridgelines, and fire-resistant structures, had served as critical firebreaks, often sparing entire neighborhoods. Conversely, vulnerabilities such as ember accumulators, connected fuels, and high-density building layouts amplified the destruction.

The role of smoke damage, often overlooked, provided another stark lesson. Many homes untouched by the fires were rendered uninhabitable due to the pervasive smoke. These findings validated advanced Moody’s RMS Event Response wildfire modeling assumptions and reinforced the importance of incorporating mitigation measures into both urban planning and insurance frameworks.

The insurance market impacts of these fires have been profound. With the non-renewal of more than one million wildfire policies in recent years, reliance on the state-backed California FAIR Plan has surged. The plan’s exposure has grown significantly, including by over 50% in Los Angeles County alone between 2024 and 2025. Regulatory reforms, such as the approval of catastrophe models for ratemaking, represent a turning point and will allow insurers to incentivize resilience measures and price risk with more stability.

In 2025, Moody's RMS U.S. Wildfire HD Model was reviewed by the California Department of Insurance and awarded a PRID (Pre-application Required Information Determination) for the model, which customers can use for rate filing in California. The model covers the entire U.S. and Hawaii, encompassing over 60 million events across 100,000 years of simulations. It incorporates a state-of-the-art solution for modeling urban configurations that accurately captures the characteristics of the Los Angeles fires.

Moody's RMS Event Response estimated that insured losses from the Palisades and Eaton Fires in Southern California will range between US$20 billion and US$30 billion when all are settled.

Severe convective storms: US losses exceed US$45 billion for third consecutive year

Away from the wildfires, 2025 marked the third consecutive year in which U.S. severe convective storm losses (SCS) exceeded US$45 billion, further cementing the peril’s growing dominance in the U.S. insurance landscape.

Comparing the last two record-setting years (2023 and 2024) with last year, 2025 saw fewer multibillion-dollar outbreaks, but it did deliver the largest individual loss event in three years: a March outbreak that caused US$8–10 billion in damages across 26 states.

Tornado activity was particularly notable, especially in the first half of the year, with more than 1,500 reports, including the first EF-5 tornado in the U.S. in 12 years. These statistics underscore the increasing frequency, intensity, and costliness of severe convective storm events, no longer ’secondary perils’ but primary drivers of loss for insurers.

Changes to the built environment, rising repair costs, and social inflation have collectively transformed a US$45 billion annual loss from an anomaly into an industry expectation.

Events such as the March outbreak and a deadly May tornado sequence in the Midwest demonstrated the peril’s regional clustering and widespread impacts, as well as the growing exposure due to urban sprawl.

In response to these challenges and risks, we released Moody’s RMS U.S. Severe Convective Storm HD Models in late 2025, which integrate high-resolution, physics-based hazard simulations with the largest-ever claims-calibrated vulnerability dataset, capturing over US$55 billion in industry claims.

Enhanced financial modeling helps insurers differentiate between scenarios of minor damage and total loss. By leveraging these tools, insurers can better manage the growing volatility of severe convective storm events, optimize pricing strategies, and foster resilience in a rapidly changing risk landscape.

The 2025 season serves as both a stark reminder of the escalating costs of SCS and a call to action to adopt cutting-edge science and technology in risk management.

North Atlantic hurricane: No U.S. hurricane landfall, but Melissa devastates Jamaica

While the North Atlantic produced its third consecutive above-normal season and the ninth above-normal season in the past 10 years, for the first time since 2015, the U.S. did not experience a landfalling hurricane. That will be of great relief to the insurance industry following multiple years of multibillion-dollar losses.

The season’s standout event was Hurricane Melissa, which made landfall in southwestern Jamaica in late October as a Category 5 major hurricane. It broke numerous records, including becoming the strongest and most intense hurricane to make landfall in Jamaica since recordkeeping began in 1851, and the joint-second-strongest and third-most-intense hurricane ever to be recorded in the North Atlantic basin. Melissa left Jamaica devastated, particularly in western areas such as Westmoreland, Saint Elizabeth, and Manchester Parishes.

Moody’s RMS Event Response estimated insured losses from Hurricane Melissa could range between US$3 billion and US$5 billion, with economic losses in Jamaica from the event potentially exceeding the island’s GDP, which was approximately US$20 billion in 2024.

Southeast Asia: Wake-up call for the region

Countries in South and Southeast Asia also found themselves in the firm grip of a series of catastrophic typhoon, cyclone, and flood events in late 2025.

Relentless rainfall events ranged from Sri Lanka to southern Thailand, central Vietnam, and western Malaysia through to parts of the Philippines and Western Indonesia, triggering widespread flooding and landslides.

Southeast Asia is no stranger to widespread flood events, but economic flood losses over the past 10 years have not exceeded US$1 billion–US$2 billion annually. Only the 2011 Thailand floods were on a larger scale, with US$45 billion economic losses reported at the time. But the 2025 floods provide a wake-up call to the vulnerability of global technology supply chains and to the insurance industry's exposure to natural catastrophe losses in the region.

Moody's RMS Event Response

In total, the Moody's RMS Event Response team reported on 106 events in 2025, a similar number to 2024, and released accumulation and modeling products and files for 29 events—including but not limited to the Los Angeles wildfires, seven U.S. severe convective storm outbreaks, and Hurricane Melissa—demonstrating our commitment to real-time event response and supporting our industry during the year’s most significant events.

Moody's RMS Event Response supports rapidly evolving future risks by updating model processes, reflecting lessons learned from recent events, and providing flexibility within applications to enable clients to add their own views of risk. As a result, Moody's RMS Event Response approach continues to evolve.

Striking a balance between timeliness and accuracy remains critical to ensure delivery of the most credible analysis while both increasing efficiency and reducing delivery timelines.

Click here to download the recently published Moody's RMS Event Response 2025 Catastrophe Review: Executive Summary, which provides context and analysis of the year’s most notable industry events and key insights we can carry into the years ahead.

Moody's RMS Event Response customers should visit the Support Center for the full-length report.